Published 17 May 2011
The Business Times
By Uma Shankari
Developers move 1,788 units, the highest volume since November; some analysts now expect May sales to hit at least 1,500 – and maybe even outstrip April’s number
SALES of new private homes (excluding executive condos) rose 29 per cent in April to a five-month high as developers pushed out more projects to ride on the buying momentum amid risk of further policy changes from the government.
Developers sold 1,788 units last month – the highest monthly volume since 1,915 units were sold in November 2010, according to data from the Urban Redevelopment Authority (URA). In March 2011, 1,386 new private homes were sold.
The number of homes launched by developers climbed by 64 per cent to 2,049 units.
‘It (April) is the strongest performing month since November 2010, when 2,331 units were launched and 1,915 units sold following a short lull in September and October after the cooling measures of August 2010. At that time, potential buyers stayed away from the market for a couple of months, only to return optimistically in November, pushing up that month’s figures,’ said Credo Real Estate executive director Ong Teck Hui. ‘The question is whether we are seeing a repeat of November’s phenomenon. After the measures in January 2011, we saw a moderation in February and March and now there is a resurgence in April, indicating that more buyers are back in the market. A sustained uptrend in May will confirm that the market is getting buoyant again.’
The government imposed a seller’s stamp duty of up to 16 per cent for private homes in January this year, and further cut the loan-to-value ratio for buyers with existing mortgages to 60 per cent.
Much of the buying momentum in April came from the Outside Central Region (OCR), where suburban condos are located. URA’s data showed that 1,010 homes were sold in the OCR in April, up from 631 homes in March.
The preference for cheaper suburban homes could also be seen in a price band analysis by Colliers International. Some 779 units went for $1,000 per square foot (psf) or less in April, which amounted to 44 per cent of all units sold in the month.
In comparison, just 391 homes were sold for $1,000 psf and under in March, making up 28 per cent of all units sold.
Two large projects in the OCR region, Eight Courtyards (from Frasers Centrepoint and Far East Organization) and Hedges Park (from Hong Leong Group, City Developments and TID) accounted for 32 per cent of all units sold in April. At Eight Courtyards, 340 units were sold at a median price of $789 psf, while at Hedges Park, 224 units were sold at a median price of $889 psf.
Looking ahead, analysts expect May home sales to hit at least 1,500 units – and maybe even outstrip sales in April – as there have been many launches this month. Take-up should be strong as developers are rolling out more small units, which sell at relatively more affordable prices of under $1 million per unit, analysts said. ‘We visited three showflats and noted that demand on the ground remains fairly strong,’ said DBS Group Research analyst Lock Mun Yee yesterday. ‘Buying interest is still centred on well-located developments with units priced at smaller quanta, as well as mass market projects.’
At Wing Tai Holdings’ 496-unit Foresque Residences at Upper Bukit Timah, around 100 units have been sold at about $1,100-1,300 psf, sources said.
Other developments that saw steady sales recently include Hoi Hup Realty’s 141-unit The Forester @ Mount Faber, where around 50 per cent of units were sold at an average price of about $2,000 psf; and the 69-unit 10 Shelford from Adam Properties, which saw a take-up of about 60 per cent of units at about $1,800-2,000 psf. Both developments offer a large proportion of small units.
But analysts noted that policy changes could affect market sentiment in the coming months.
During the campaign for the general election, National Development Minister Mah Bow Tan mentioned that the household income ceiling for buying new HDB flats will be reviewed in the next six months. The ceiling has been unchanged at $8,000 for the past 17 years, and could be raised to $10,000 – although the actual level will be decided after the review.
‘As the market is aware that the government is reviewing the income ceiling for public housing, there is some degree of apprehension as to how it will impact the mass market,’ said Li Hiaw Ho, executive director for CBRE Research.
Measures in the HDB sector will have an indirect impact on the demand for mass, and to a certain extent, mid market properties, said Citigroup economist Kit Wei Zheng.
‘First, higher HDB income ceilings would channel some of the current demand from the HDB resale and mass market private properties away. If HDB resale prices decline, it would also affect the ability of potential HDB upgraders to move to mass or mid-market private properties,’ Mr Kit said.
For now, buyers are likely to adopt a ‘wait-and-see’ approach, said Colliers’ director of research & advisory Chia Siew Chuin. ‘They are likely to be more selective and price-sensitive. However, affordably priced projects with good attributes are still expected to enjoy healthy sales.’
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